Could $20,000 Invested in Palantir Help You Retire a Millionaire?

Though Palantir Technologies (NASDAQ: PLTR) stock has pulled back somewhat, it has still delivered an incredible performance to investors, climbing more than 670% in five years. And over the past three months, the stock has gained fresh momentum, advancing 60%.

Investors have piled into Palantir stock as the company has shown itself to be an early winner in the artificial intelligence (AI) revolution. Palantir offers its customers a way to easily and quickly harness the power of AI, and that's translated into tremendous demand and revenue growth.

The AI story continues, with key players such as chip designers and cloud service providers speaking of high demand, and that paints a bright future for Palantir. Could $20,000 invested in this tech company help you retire a millionaire? Let's find out.

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Palantir's path over 20 years

We'll start by considering the Palantir story so far. This company isn't new to the scene; it's actually been around for more than 20 years, and in its early days, mainly served government customers. Palantir develops software systems that gather a customer's data and put it to use. And a key moment took place a few years ago when Palantir released its Artificial Intelligence Platform (AIP), a system that leverages the power of AI to analyze and use the data to make truly game-changing decisions.

Governments, particularly the U.S. government, have continued to appreciate Palantir's strengths, and this has kept government revenue climbing in the double digits. But the new element for Palantir has been the growth it's seen in its commercial business. The commercial customer has rushed to get in on AIP, and this has supercharged revenue growth in recent years.

The latest quarter is the perfect example. U.S. commercial revenue advanced 149% to $764 million, while U.S. government revenue climbed 90% to $809 million. And total contract value (TCV) is on the rise too -- the company closed TCV of $3.3 billion, up 49% from the same period last year. U.S. commercial customer count has also skyrocketed from less than 20 just a few years ago to more than 600.

Balancing revenue and profit

At the same time, Palantir hasn't been focused only on revenue. It's also done a fantastic job balancing growth with profitability, as we can see through its Rule of 40 score of 155%. A score of 40% is considered good, so clearly, Palantir is winning tremendously in this area.

Now, let's return to our question: As it's firing on all cylinders, can this AI player help you retire a millionaire?

We'll start by considering how a $20,000 investment in Palantir a few years ago would have played out. If you had invested that sum in the company a decade ago, today the value of your investment would be more than $390,000. That, along with investment in a variety of other quality stocks across industries, could have helped you along the path to millions.

Moving forward, Palantir could have room to run, particularly over the long term. Today, it trades for 116x forward earnings estimates, which isn't cheap, but it's important to keep in mind that the stock traded for more than 250x about a year ago. So investors will pay a premium for Palantir stock, suggesting that it could move higher from today's level.

It's also important to note that AI is just starting to be applied in the real world, so significant growth here may lie ahead. And Palantir's U.S. commercial customer count shows us two points that are very positive: Customer count is growing quickly, so momentum is there. But customer count still is low enough to offer considerable room for growth. All of this sets the stage for significant commercial revenue growth in the quarters and years to come.

Palantir, on its own, is unlikely to make you a millionaire. It's rare when one stock alone, even a top performer, will do the entire job, and it's too risky to bet on just one or two stocks to build wealth. But as part of a portfolio of quality stocks, this AI player could help you reach that goal as you retire.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.